FKLI - The Bears Flash Their Claws - 11/5/2012

The long positions were closed off last Wednesday when price went below the prior day low. One characteristic that often follow a "dead ' ADX is often a sudden blowup or blow down. And that is exactly what happened here on Friday when price just collapsed 23 points. Price crashed through all the 3 bands in one go. This is been complimented by a negative MACD, DMI and Stochastic. So we will go on a new sell on coming Monday at 1647.  Place stop at 1658.

The ADX has finally waken up but since it is at 10's which is far away for my usual preferred 20's level, so I cannot confirm it is the beginning of a new trend, but I would pay close attention to it.

As the last 2 weeks of new highs has successfully erased off the bearish divergence, so I would not expect this is the beginning of the end for this market. But I would rather expect the "hidden hands" to push the market to another new high later and put some false confidence and tempt the retail investors  back before the real slaughter begins.

 
The weekly chart is still murky as the Stochastic stays positive but the MACD has gone negative. the DMI is still wiggling and both are falling below 20's with ADX continues falling to 10's. These are classic signs that the market is 'dead". The bears seem to have a slightly upper hand as price has now closed below the top band which by itself is a sell signal. But the single most important item here is that, unlike the daily chart, the weekly chart retains all the bearish divergences which were forming since April this year. Since it is a triple divergence with lower tops formed in April, August and October. This is extremely rare, so I would NOT want you to miss out on this big one.

If you incorporate chart readings with politics, does it seems to predict  the incumbent will bruise badly the coming election ?